LONDON – In 15 months, Britain will host a large meeting in London that may sound like it comes from yesterday but in fact belongs to tomorrow.
The meeting will be the gathering of the heads of government of the 52 countries that are member states of the Commonwealth, a club or network of nations largely, although not entirely, left over from the alumni of the former British empire.
In fact, several of the current member states do not come from the British-related origin at all, and several more have expressed interest in joining this interesting grouping.
What is it that continues to make this organization so attractive? And what is it that makes the British so determined to foster and develop its myriad connections? After all the “Age of Empire” is long past — indeed, in a network world the age of any hierarchy of nations is past — a point that the superpower enthusiasts in such capitals and Washington and Beijing have not yet quite grasped.
The answer lies in connectivity and the internet. As digital information transfers and data transmission begin to dominate the entire system of international exchange, the huge value of a common working language (in this case English), common culture, common standards and common attitudes starts to give a premium advantage to all trade and business relations conducted between states with these common characteristics.
McKinsey Global Institute estimates that flows of data now generate more economic value than the entire global goods trade. If that is right, it changes not just the main channels of international commerce, it also changes many of the rules. This is because bulk digital information, and the services and instructions that it carries, knows no frontiers and obeys no tariffs barriers, although of course there can be, and in some countries are, strong state-administered blocking systems.
But it has been estimated that when this kind of trade is conducted between the 52 Commonwealth member states there is an advantage of as much as 19 percent in lower costs, reduced waiting times, fewer misunderstandings, simpler procedures and so on.
Of course this number may be over-precise, but there can be no doubt that in an age when trade protection threatens on many sides, not least from the United States, this kind of free flow of commerce, based on trust and familiarity, is a sizable gain.
For Britain, just at the moment, when it is seeking to open up new markets for export, this amazing Commonwealth network, comprising almost one-third of humankind, obviously becomes increasingly important. Of course it is no substitute for continued easy access to the European Union single market, and it is now the declared aim of the United Kingdom to settle its new relationship with the EU as far as possible on a zero-tariff basis. Negotiations on both the “divorce” and on the new relationship are about to begin.
But Commonwealth countries are by no means all lower income states that used to be labeled “developing” and not considered very valuable trading partners. On the contrary, today’s Commonwealth family (as it likes to describe itself) contains several of the fastest-growing and most dynamic world economies, veritable consumer market leaders, such as India, Australia, Malaysia, Nigeria, Canada, South Africa — as well as massive sources of investment back into the U.K. itself.
One proposal beginning to take shape in preparation for the heads of government gathering next year, is for a “Commonwealth prosperity zone” of freely trading and investing nations in Southeast Asia, but including Australia, Singapore, New Zealand and the U.K. Other Commonwealth countries could join in as they are inclined. This idea will be promoted in the next few weeks when the trade ministers of all Commonwealth countries gather to plan the next steps on this front.
What we are seeing here is part of a new trade pattern emerging from the disrupted past. U.S. President Donald Trump has scattered all the jigsaw pieces on the Asian trade board by scrapping the Trans-Pacific Partnership free trade pact, in the same way the Brexit decision upsets all the old assumptions about trade flows in Europe. Who knows what new relationships will emerge?
As a new global trade pattern is reassembled from the chaos, the old tariffs and quota instruments of trade bargaining will play a far smaller part. Non-tariff barriers and regulations will play far larger part. But even they will have less impact in an age of digital imports and exports.
It will increasingly be a struggle between two principles in international commerce — trust versus protection. Trust will be the basis on which open and free trade can be increasingly built. Protection will be the trade destroyer, to the vast disadvantage of the countries that apply it.
It is more than possible that the modern Commonwealth may emerge as one of the bastions of trust. That is why the British, with their long-standing fondness for free trade, are starting to give it long overdue attention.
David Howell is a British Conservative politician, journalist and economic consultant. He is chairman of the House of Lords International Relations Committee.
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